Hibbett Sports Inc.
) came up with its preliminary results for the second quarter of
fiscal 2015 that reflects weak comparable store sales due to
lower-than-expected traffic trends as customers are still cautious
with their purchases. Consequently, the sporting goods retailer
provided disappointing earnings guidance for the second quarter and
also curbed its expectations for fiscal 2015.
Following the announcement, shares of Hibbett Sports plunged 6.43%
during yesterday's after-hours trade, to close at $46.85 per share.
The company expects revenue for the second quarter to be nearly
$194 million, marking an increase of 4.2% from $186.2 million in
the prior-year quarter. However, revenue for the quarter is
expected to fall short of the Zacks Consensus Estimate of $203
million. Meanwhile, comparable store sales (comps) growth is
projected to be about 0.1%.
The company sees gross margin of 33.4% compared with 34.3% reported
in the second quarter of fiscal 2014. The 90 basis points
contraction is due to higher markdowns to get rid of the slow
moving and aged inventory. Another factor weighing on the company's
gross margin in the second quarter is the projected increase in
store occupancy and logistics expenses, as a percentage of sales,
due to weaker comps.
Looking ahead, the company expects gross margins to continue
bearing the impact of higher markdowns in the near-term, though a
slight moderation is expected toward the end of fiscal 2015.
While the company notes that second quarter store operating,
selling and administrative expenses were almost in line with
internal expectations, it projects an increase as a percentage of
sales due to the soft comps performance.
Coming to earnings, the company sounded cautious about its
estimated earnings for the second quarter, while it slashed its
forecast for fiscal 2015, let down by the weak comps and gross
margin performance. The company expects second quarter earnings per
share in the range of 30-32 cents as against 40 cents earned in the
prior-year quarter. The company expects to report second quarter
fiscal 2015 results on Aug 22, 2014.
For fiscal 2015, the company now anticipates earnings per share of
$2.63-$2.73 with comps growth in the low single-digit range.
Earlier, the company had projected earnings to be in the
$2.78-$2.98 per share range, while comps stood to grow in the
low-to-mid single-digit range.
Though disappointed by the second quarter results, the company
remains optimistic about its back-to-school performance as sales
trends improved slightly in July. Moreover, it remains confident of
incremental revenue contributions from its new stores as results in
these stores have been encouraging, reflecting improved new store
Other Stocks to Consider
Currently, Hibbett carries a Zacks Rank #3 (Hold). Better-ranked
stocks in the related sector include KAR Auction Services Inc. (
), Barnes & Noble Inc. (
) and ULTA Salon, Fragrance & Cosmetics Inc. (
). While KAR Auction has a Zacks Rank #1 (Strong Buy), Barnes &
Noble and ULTA Salon carry a Zacks Rank #2 (Buy).
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